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Read the Impact Assessment EUROPEAN COMMISSION Brussels, 7.6.2018 SWD(2018) 259 final /2 This document corrects document SWD(2018) 259 final of 25.05.2018. The annexes were not included. The text shall read as follows: COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Council Directive amending Directive 92/83/EEC on the harmonization of the structures of excise duties on alcohol and alcoholic beverages {COM(2018) 334 final} - {SEC(2018) 254 final} - {SWD(2018) 258 final} EN EN CONTENTS 1. Introduction and Context .......................................................................................................... 4 1.1. Introduction ................................................................................................................................ 4 1.2. Scope for reforms ....................................................................................................................... 5 2. What is the problem and why is it a problem? ......................................................................... 5 2.1. Introduction ................................................................................................................................ 5 2.2. Scope of the problems................................................................................................................ 6 2.3. Problem 1 - Dysfunctions in the application of exemptions for denatured alcohol .................. 6 2.4. Problem 2 – Dysfunctions in the classification of certain alcoholic beverages ........................10 2.5. Problem 3 – Dysfunctional application of reduced rates .........................................................18 2.6. Problem 4 – Unclear provisions to measure the Plato degree of sweetened / flavoured beer23 2.7. Conclusion ................................................................................................................................26 3. Why should the EU act? ......................................................................................................... 26 4. What should be achieved? ...................................................................................................... 27 4.1. General objectives ....................................................................................................................27 4.2. Specific objectives ....................................................................................................................28 5. What are the various options to achieve the objectives? ........................................................ 28 5.1. Link between problems/drivers and options ...........................................................................28 5.2. Dysfunctions in the application of exemptions for denatured alcohol ....................................31 5.3. Dysfunctions in the classification of certain alcoholic beverages ............................................33 5.4. Dysfunctional application of reduced rates .............................................................................37 5.5. Measurement of Plato degree for sweetened / flavoured beer ..............................................39 6. What are the impacts of the different policy options and who will be affected? ................... 40 6.1. Dysfunctions in the application of exemptions for denatured alcohol ....................................41 6.2. Dysfunctions in the classification of certain alcoholic beverages ............................................42 6.3. Dysfunctional application of reduced rates .............................................................................46 6.4. Unclear provisions to measure of Plato degree for sweetened / flavoured beer ...................48 7. How do the options compare? ................................................................................................ 50 7.1. Dysfunctions in the application of exemptions for denatured alcohol ....................................50 7.2. Dysfunctions in the classification of certain alcoholic beverages ............................................53 7.3. Dysfunctional application of reduced rates .............................................................................58 7.4. Unclear provisions to measure Plato degree for sweetened / flavoured beer ........................61 7.5. Summary of preferred package of options ..............................................................................63 8. REFIT (simplification and improved efficiency) ................................................................... 65 8.1. Context, methodology and constraints ....................................................................................65 9. How would actual impacts be monitored and evaluated? ...................................................... 68 10. ANNEXES ............................................................................................................................. 70 ANNEX 1. Procedural Information ........................................................................................ 70 1 ANNEX 2. Synopsis report – Stakeholder consultation ......................................................... 77 ANNEX 3. Who is affected by the initiative and how ............................................................ 90 ANNEX 4. Analytical Models used in preparing the Impact Assessment ............................. 95 ANNEX 5. Council Conclusions (6 December 2016) ............................................................ 98 ANNEX 6. Drivers of the dysfunctions in the application of exemptions for denatured alcohol 101 ANNEX 7. Classification of alcoholic beverages ................................................................. 105 ANNEX 8. Drivers of the dysfunctions in the classification of certain alcoholic beverages 113 ANNEX 9. Tax, affordability and consumption ................................................................... 116 ANNEX 9A Excerpt from Annex 6a of the external evaluation (by Ramboll) ..................... 123 ANNEX 10. Reduced rates for other small producers ............................................................ 132 ANNEX 11. Driver of the dysfunctional application of reduced rates ................................... 142 ANNEX 12. Driver of the unclear provisions to measure the Plato degree of sweetened / flavoured beer 143 ANNEX 13. Methodology for measuring the Plato degree .................................................... 144 ANNEX 14. Country-specific analysis of impacts of policy options for measuring Plato degree in sweetened/flavoured beer ..................................................................................................... 147 ANNEX 15. Assessment of the impact on the market of the re-classification of certain products 153 ANNEX 16. Problems that will not be addressed within this impact assessment .................. 159 ANNEX 17. Comparison of impacts of alternative options ................................................... 160 ANNEX 18. Monitoring and Evaluation of Impacts .............................................................. 168 2 ABBREVIATIONS ABV Actual Alcoholic Strength by Volume AFC Alcohol as a Flavour-Carrier AWP Aromatised Wine Products BTI Binding Tariff Information CDA Completely Denatured Alcohol CJEU Court of Justice of the European Union CN Combined Nomenclature CNEN Combined Nomenclature Explanatory Note(s) EMCS Excise Movement and Control System EPC Excise Product Code ET Ethyl Alcohol EU European Union FPG Fiscalis Project Group hl Hectolitre IP Intermediate Products ITEG Indirect Tax Expert Group mn Million MS Member State(s) OFB Other Fermented Beverages OPC Open Public Consultation PDA Partially Denatured Alcohol REFIT Regulatory Fitness and Performance Programme SME Small and Medium-sized Enterprise TFEU Treaty on the Functioning of the European Union WHO World Health Organisation 3 1. INTRODUCTION AND CONTEXT 1.1. Introduction The European Commission is committed to preventing trade distortions in the single market, ensuring fair competition between businesses, and reducing administrative burdens and compliance costs for businesses and tax administrations. The launch of the single market resulted in the abolition of tax controls at the borders between Member States (MS) and the adoption of common rules for excise products, including alcohol, to facilitate cross-border trade and to prevent competitive distortions. Excise duties for alcohol are regulated through two directives: Directive 92/84/EEC1 on the approximation of the rates of excise duty on alcohol and alcoholic beverages sets out the minimum rates of excise duty on alcohol products. Directive 92/83/EEC on the structures of excise duty on alcohol and alcoholic beverages sets out the common rules on the structures of excise duty applied to alcohol and alcoholic beverages. This directive defines and classifies the different types of alcohol and alcoholic beverages, according to their characteristics, and provides a legal framework for reduced rates, exemptions and derogations in some sectors. In addition to these directives, Directive 2008/118/EC2 sets out the common provisions, which apply to all products subject to excise duties. This directive is currently under review in a separate proposal. Furthermore, businesses must adhere to other EU legislation, which regulates areas such as product definitions, labelling etc. Both alcohol Directives have failed to keep pace with developments including inflation. In 2006 in response to a request
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